DEFENSE LOGISTICS AGENCY

 HEADQUARTERS

 8725 JOHN J. KINGMAN ROAD

 FORT BELVOIR, VIRGINIA 22060-6221

Corrected date: January 19, 2016

MEMORANDUM FOR SUPPLY, FINANCE, AND SUPPLY DISCREPANCY REPORT 

(SDR) PROCESS REVIEW COMMITTEE (PRC) MEMBERS

SUBJECT: Approved Defense Logistics Management Standards (DLMS) Change (ADC) 1160, 

Procedures for Recommending and Authorizing Credit for Validated SDRs,

Associated Reply Code Revisions, and Required use of the Reason for Reversal 

Code in Issue Reversals (Finance/Supply/SDR)

The attached change to DLM 4000.25, Defense Logistics Management Standards, is 

approved for expedited implementation. DoD WebSDR and Component SDR systems must be 

updated to support use of new and revised SDR reply codes for joint implementation on April1, 

2016. The new issue reversal reason codes are authorized for staggered implementation; expedited 

implementation by DLA Distribution is requested. The updated DLMS Implementation 

Conventions (IC) will be posted to the Defense Logistics Management Standards Office Web at 

www2.dla.mil/j-6/dlmso/elibrary/TransFormats/140_997.asp, within 10 days from the above date.

Addressees may direct questions to Ms. Ellen Hilert, DOD SDR System Administrator,

e-mail ellen.hilert@dla.mil, Ms. Mary Jane Johnson, DOD MILSTRAP Administrator, email

mary.jane.johnson@dla.mil, or Ben Breen, SDR Alternate, e-mail benjamin.breen@dla.mil. All

others must contact their Component designated Supply PRC representative or SDR Subcommittee 

representative available at www2.dla.mil/j-6/dlmso/CertAccess/SvcPointsPOC/allpoc.asp

 

DONALD C. PIPP

Director

Defense Logistics Management 

Standards Office

Attachment

As stated

cc: 

ODASD (SCI)

JPIWG
Attachment, ADC 1160

Page 1

Attachment to ADC 1160

Procedures for Recommending and Authorizing Credit for Validated SDRs, 

Associated Reply Code Revisions, and Required use of the Reason for 

Reversal Code in Issue Reversals

1. ORIGINATING SERVICE/AGENCY AND POC INFORMATION: 

a. Technical POC: Ms. Ellen Hilert, DOD SDR System Administrator, 703-767-0676 

or DSN 427-0676, e-mail: ellen.hilert@dla.mil

b. Functional POC: Ms. Ellen Hilert, DOD SDR System Administrator, 703-767-0676 

or DSN 427-0676, e-mail: ellen.hilert@dla.mil

2. FUNCTIONAL AREA: Receipt/SDR/Finance

3. REFERENCES:

a. DLM 4000.25, Defense Logistics Management Standards (DLMS), Volume 4, 

Military Standard Billing System – Finance.

b. Defense Distribution Center Materiel Accountability Division Notification, Count on 

This (CoT) for January 2015 

c. “D7 Reversals Kickoff Discussion” conference call sponsored by DLA Oversight and 

Compliance/Audit Readiness Service Provider Team, March 27, 2015

d. DLM 4000.25-2, Military Standard Transaction Reporting and Accountability 

Procedures (MILSTRAP), Chapter 9, Rejection, Routing, and Reversal of Transactions

e. ADC 259, Revise DLMS Supplement (DS) 867I and MILSTRAP Issue Transactions 

to Support Navy Requirement for Reason for Reversal Code, November 9, 2007

f. Request for Implementation Date for Approved MILSTRAP Change Letter (AMCL) 

13, Partial Reversal of Select Transactions, MILSTRAP February 14, 2008

g. ADC 280, PQDR/SDR/TDR Credit Tracking, August 8, 2008

h. ADC 403, Administrative Update to Identify MILSTRAP Transactions Authorized for 

Reversal, April 25, 2011

i. DLM 4000.25, Defense Logistics Management Standards (DLMS), Volume 2, Chapter 

17, Supply Discrepancy Reporting

4. APPROVED CHANGES: Substantive updates subsequent to staffing are identified in 

green highlighting.
Attachment, ADC 1160

Page 2

a. Brief Overview of Change: 

(1) This change clarifies procedures for preparation of SDR replies when used to 

request/report a financial adjustment for a validated discrepancy. This change updates available

SDR reply codes to separate the storage activity’s recommendation for financial action from the 

source of supply(s) (SoS) reply to the customer indicating that an adjustment is being provided. 

The updated reply codes will discretely identify when credit is provided by reversal of the 

original issue. 

(2) This change updates DLMS/MILSTRAP guidance for use of the issue 

reversal transaction. It establishes a requirement to include an issue reversal reason code for all 

Components as a DLMS enhancement and expands the scope of available codes beyond those 

currently used by DLA Distribution Centers in support of a Navy-unique requirement.

(3) This change updates Military Standard Billing System (MILSBILLS)

procedures to formally document the option to provide credit to the billed activity for discrepant 

shipments prior to storage activity receipt of the returned discrepant materiel. 

(4) In conjunction with this change, the requirement for generation of the 

prepositioned materiel receipt (PMR) for directed discrepant materiel returns and tracking for the 

return shipment are clarified. 

b. Background: 

(1) As a result of a DLA audit team recommendation, DLA Distribution 

temporarily discontinued use of the DLMS 867I Issue Reversal (Document Identifier Code 

(DIC) D7) as a mechanism to trigger credit on SDRs. In the absence of the issue reversal, it was 

believed that the SoS would be able to provide a financial adjustment using MILSBILLS 

procedures under DLM 4000.25, DLMS, Volume 4, Chapter 4 (Reference 3.a.) to provide the 

authorized credit as a DLMS 810L Logistics Bill (DIC FB1/GB1 Billing for Issue from Stock 

(Credit)).

(2) DLA Distribution provided notification of the (temporary) policy to terminate 

use of the issue reversal (Reference 3.b., Enclosure 9). DLA Distribution Centers use the issue

reversal predominately in support of Navy, Air Force, and Marine Corps directed shipments. By 

processing the issue reversal, the financial system supporting the SoS would automatically

provide the required credit. Without the issue reversal, the SoS is responsible for taking the 

necessary steps to ensure their financial system issues the customer’s credit.

(3) Due to operational impact on the Services relying on the storage activity use 

of the issue reversal to provide credit where due and, as a byproduct of internal Service 

processing, to reinstate the original customer demand, the DLA audit team authorized a return of 

the original procedures pending further research. A meeting was subsequently convened 

(Reference 3.c.) during which the DLA audit team reviewed their reasons for concern with the 

issue reversal process. They explained that concern was predominately due to lack of 

documented governing procedures and lack of a clear audit trail, particularly on the DLA 

Distribution side. The Navy and Air Force explained their operational requirement for continued 

use of the issue reversal and clarified that issue reversal transactions are retained for audit 

purposes within the Service systems. In addition to automatically triggering the financial 

adjustment, use of the issue reversal systemically “resets” the original demand (with all its 
Attachment, ADC 1160

Page 3

associated attributes (e.g., urgency of need), within the requiring Service’s supply system. 

DLMSO agreed to propose DLMS procedures to ensure that all relevant transactions clearly 

portray the underlying business process for a clear audit trail. This will require update to the 

SDR and issue reversal process.

(a) SDR. Currently, under DLMS SDR procedures, both the storage 

activity and the SoS use the same Reply Code 101 (credit recommended/authorized) on their 

action activity response. This is a multipurpose code, since its interpretation is dependent upon 

the Service/Agency and the scenario involved. Traditionally, most trading partners understood 

this, but with the sudden termination of issue reversals, those parties relying on the storage 

activity for that action to trigger credit processing were left without an understanding of the 

business process and the use of a multipurpose code adds to the confusion. After discussion with 

the SDR implementation team and, later, with those participating in the kick-off meeting, it was 

decided that it would be more appropriate to separate the codes representing the storage activity 

recommendation from the SoS authorization and processing of credit and to clearly indicate 

when an issue reversal applies. This will not only improve SDR communication among the 

storage activity, SoS, and customer, but will provide the desired audit history.

(b) MILSTRAP Guidance 

1. Although the MILSTRAP (Reference 3.d.) authorizes the

reversal of issue transactions, the DLA audit team pointed out that MILSTRAP provides no 

parameters for the intended use and there are no procedures for credit reversals tied to issue 

reversals. In the absence of more specific governing DOD procedures, the audit team looked for 

a Service-specific memorandum of agreement (MOA) to document the existing use of the issue 

reversal. However, no such MOA currently exists. During the kick-off meeting, the Services 

expressed a preference for updating DOD guidance in the belief that this will be sufficient to 

support the current practice. 

2. It should be noted that MILSTRAP Chapter 7 does include 

specific guidance regarding the requirement for a proper audit trail for the research of 947I 

Inventory Adjustments (Accounting Errors) (legacy D8B/D9B functionality)1

, as follows: 

“When subsequent research finds that the accounting adjustment was caused by an unposted, 

duplicate, or otherwise improperly posted transaction, a reversal of the accounting adjustment 

and (as appropriate) the incorrectly posted ‘supply’ transaction is required. The owner/manager 

will ensure that proper audit trails are maintained to reflect the posting of the correct supply 

transaction.” 

(c) Issue Transaction Reason for Reversal Code. ADC 259 (Reference

3.e.) expanded the DLMS reason for reversal code to establish codes for use with the DLMS 

867I Issue transaction in support of a Navy legacy system requirement. However, it also 

documents concerns regarding continued use of the issue reversal by DLA Distribution Centers 

to support the Navy and Air Force as an alternative for using the SDR process and subsequent 

MILSBILLS procedures to provide credit where applicable (refer to ADC 259). The reasons for 

reversal codes established under ADC 259 are only applicable to the Navy. After discussion 

with the participants of the kick-off meeting, it was agreed that reason for reversal codes should 

 1 DLMS 947I Quantity or Status Adjustment Reason Code AB = Inventory Adjustment (Accounting Error). Gain or 

loss resulting from clerical or automated information system errors which are not subject to correction by reversal of 

original transaction, single adjustment. (MILSTRAP legacy DIC D8B or D9B functionality.)
Attachment, ADC 1160

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be applicable to all Components for which the issue reversal is employed as a DLMS 

enhancement. Additionally, the current code set is insufficient to identify applicable situations

for which the issue reversal is employed. It was agreed that these codes must clearly indicate the 

basis for the issue reversal so that all parties involved recognize this action and a clear audit 

history is preserved. 

(d) DLA Distribution Issue Reversal Process Rules. The following 

overarching rules are observed under current procedures:

1. The issue reversal is authorized in response to validated SDRs 

identifying shortage, wrong item, and condition-related discrepancies.

2. The procedures are applicable to Navy, Marine Corps, and Air

Force directed issues of materiel.

3. The only applicable use for Security Assistance is for Navy 

Foreign Military Sales.

4. For wrong item SDRs, the distribution center preparing the 

SDR reply directs the return of the wrong item received (SDR Reply Code 105) in conjunction 

with recommending/authorizing credit (SDR Reply Code 101). The DLA Distribution Center 

provides the customer return shipping instructions, a carrier tracking number, and the timeframe 

for the return via the SDR reply. The Distribution Center corrects its inventory balances 

immediately using DLMS 947I Inventory Adjustment (Physical Inventory)2 transactions citing 

the Physical Inventory Error Classification Code 2L (Issue – Wrong Materiel Selected) or 2M 

(Issue - Materiel Selected from Wrong Location). The immediate inventory adjustment gain is 

for the NSN of the requisitioned NSN (correct NSN) that was never actually shipped, and a 

corresponding inventory adjustment loss is processed for the wrong item that was shipped. The 

customer is expected to return the wrong item to the distribution center using the same document 

number as the original shipment with a different Transportation Control Number than it was 

originally shipped on; however, these procedures will apply if a different document number is 

used. The distribution center does not process the issue reversal until the return shipment for the 

discrepant materiel is received, where directed return applies. Since there is currently no PMR 

for these returns, the distribution center relies on the customer including the printed SDR with 

the return shipment to recognize that the materiel is associated with a discrepant return.

5. The issue reversal generated by the distribution center when the 

distribution center records the materiel return receipt to the owner’s account actually causes the 

storage activity inventory balance to be systemically adjusted unnecessarily resulting in an 

incorrect balance. This is because the prior adjustment in response to the SDR validation 

corrected inventory balances. The adjustment resulting from the issue reversal causes an 

increase to the inventory that must then be corrected by yet another manually submitted 

inventory adjustment to bring the inventory back into balance.

6. Partial Issue Reversal. A similar scenario applies to 

shipments containing mixed stock when the erroneous materiel is directed for return. Upon 

 2 DLMS 947I Quantity or Status Adjustment Reason Code AA = Inventory Adjustment (Physical Inventory). Gain 

or loss disclosed as a result of physical count of stock, single adjustment. (MILSTRAP legacy DIC D8A or D9A 

functionality.)
Attachment, ADC 1160

Page 5

distribution center receipt of the incorrect materiel, the distribution center processes a partial 

reversal (rather than reversing the entire quantity issued, since a portion of the quantity shipped 

was correct).

Staffing Note 1: Although approved via AMCL 13, no official implementation date was

established for the use of the partial reversal process (refer to Reference 3.f.). In response to 

original proposal, all Components are asked to confirm implementation status for the partial 

issue reversal and associated reversal edits and controls documented in AMCL 13, so that an 

updated ADC can be issued for this process and applicable procedures published in MILSTRAP. 

- Navy: Navy implemented the partial reversal process documented in AMCL 13 in 

2001.

- Marine Corps: The Marine Corps partially implemented the partial reversal process. 

The USMC wholesale system (Stock Control System) implemented partial reversal for DIC 

D8_/D9_ transactions, but does not execute partial reversal for issues of materiel. [See comment 

resolution for additional detail.]

- Air Force: Integrated Logistics System – Supply (ILS-S) does NOT do partial reversal, 

reversals are processed for the complete quantity and then re-processed with the correct 

quantity/condition/identity. ILS-S will not be implementing AMCL 13; however, will re-look 

when this is re-issued as an ADC.

- Army: The Army interface does not support issue reversal or use of the partial issue 

reversal.

- DLA Distribution: DLA Distribution confirmed that partial issue reversals are restricted 

to SDR returns for Navy and Air Force maintenance activities.

7. The above procedures are only applicable to SDRs submitted 

within SDR submission time standards and the original issue transaction is accessible (not 

archived). Issue records are normally available for two years, except at high volume distribution 

centers where they are accessible for reversal for one year.

(4) Service Specific Background

(a) Air Force 

1. The Air Force uses the issue (DLMS 867I/legacy DIC D7_) 

reversal process only in their retail supply system and only for maintenance customers. When a 

maintenance customer receives an item that is not correct, they will organizationally refuse the 

item. A local SDR is written and responded to by the local distribution center authorizing credit. 

It is only after the reversal and the property gets receipted back into DSS that the Air Force is 

alerted of this problem. The Air Force retail system does not bill internal customers through 

MILSBILLS/Interfund; therefore, Air Force requires the issue reversal to give the retail customer 

full credit. The reversal action reestablishes the customer’s original demand and resets the 

associated logistics data. The issue reversal also ensures that credit is received on the same 

document number as the original issue. For DLA or other Service-managed items, a second 

SDR (using SDR Document Type Code 7) may then be prepared by DLA in support of the Air 

Force (under a DLA/Air Force Inter-Service/Agency Agreement). This SDR will be submitted 

to the SoS or shipping depot, as applicable. This second SDR uses an Air Force FB-series 

DoDAAC document number (rather than the Air Force maintenance non-standard document 

number). This part of the SDR process uses MILLSBILLS processes when credit is provided to

the Air Force requisitioning FB-series DoDAAC. 
Attachment, ADC 1160

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2. When Air Force materiel is issued for Air Force maintenance 

under the non-standard document number construct beginning with the letter “M” (rather than an 

Air Force Service/Agency Code), the issue reversal process is applicable to Air Force-directed

issues. The Air Force maintenance document numbers beginning with the letter M cannot be 

used on an inter-Service basis. This document number construct is invalid under DOD rules. 

The Air Force has been requested to discontinue this practice.

(b) Navy

1. The issue (867I/D7_) reversal process is a Financial 

Improvement and Audit Readiness (FIAR) compliant process that corrects inventory for the 

issuing activity and reverses a net price bill (internal Navy Enterprise Resource Program (ERP) 

system) movement type code 602/MILSBILLS DIC FA2 (for net price bill reversal) for the SDR 

originator. This ensures the originator is not erroneously billed for materiel not received, and 

ensures inventory accuracy is maintained while optimizing Fleet readiness. Without this process 

in place, the Fleet will incur both net price and carcass price bills as a result of issuer error. The 

goal of the SDR program is to ensure quality shipper performance and customer support; the 

issue reversal process is a vital component to the success of the program.

2. If the issuer does not process an issue reversal upon receipt of 

the discrepant material, the Fleet customer will incur a carcass charge against the reorder 

document number because they will be unable to use the carcass turn-in receipt already matched 

against the issue of the SDR document number. Under the SDR document number, the customer 

ordered NIIN A, was issued NIIN B, turned in NIIN A for carcass credit (to pay net price for the 

materiel as opposed to standard price). The Fleet customer still needs NIIN A. Therefore, the 

Fleet customer will reorder NIIN A under a different document number. If the issue isn't 

reversed for NIIN A under the original SDR document number, that carcass receipt cannot be 

used to match against the issue of the reorder document number. Therefore, a carcass charge 

will result under the reorder document number. If a timely issue reversal is not processed and a 

carcass bill sits under the reorder document number for more than two years (which 

unfortunately has occurred), the billing timeframes do not allow for carcass credit to be given. 

3. Bottom Line: The issue reversal process is fully auditable in 

Product Data Reporting and Evaluation Program (PDREP) and the Navy ERP system. When the 

issue reversal is generated, the net price bill is reversed, the internal Navy ERP (SAP) Movement 

Type 601 (for goods issue in standard sales process) is reversed, and the outbound delivery is 

deleted. If the bill and bill reversal do not appear in MILS History for some reason, they can be 

seen in the Supply Billing Report. The internal Navy ERP (SAP) Movement Types 601 and 602 

(for reversal of 601) are visible in transaction history. By viewing the document flow within the 

Sales Order, the delivery number, goods issue number, and billing documents are all visible as 

well.

(5) WebSDR Background. During discussion of the step-by-step processing of 

SDRs by the Navy, it became apparent that there were several misunderstandings of the 

WebSDR/PDREP interface and DLMS SDR processing. For clarification, the expected process 

flows are outlined here.

(a) A customer SDR for a DLA distribution center shipment should be 

submitted to the distribution center for initial processing. WebSDR will send an information 

copy to the SoS (when available in the original submission). The distribution center will validate 
Attachment, ADC 1160

Page 7

the discrepancy and transmit an SDR reply to the customer. WebSDR will send an information 

copy to the SoS (potentially added or updated by the distribution center). The SoS will normally

confirm the distribution center response by repeating the reply codes previously used. The SoS 

may enhance the prior response with additional information. Alternatively, the SoS may correct 

the distribution center response by citing Reply Code 151 (replacement/revised 

disposition/status; prior response is superseded) and the appropriate reply code(s).

(b) In the above scenario, if the customer submits their SDR to the SoS 

instead of the distribution center, the SoS should forward the SDR to the distribution center. 

This is done by responding to the SDR with Reply Code 504 and identifying a new action 

activity. This will cause WebSDR to inform the customer via SDR reply that the SDR has been 

forwarded to the new activity and generate a new original report (Transaction Set Purpose Code 

00) containing all the latest basic report information (if updated) for the new action activity. 

Staffing Note 2: For many years WebSDR was unable to handle requests for Reply Code 504 

forwarding when the original submission was established using Transaction Set Purpose Code 49 

(Historical), indicating the SDR and reply were processed internal to the single SDR processing 

system external to WebSDR. In this scenario, the SDR system (e.g. PDREP) transmits the 

“historical” SDR as an image for WebSDR use in preparation of management reports, but 

standard WebSDR edits and transmission to other systems do not apply. In the absence of an 

original submission (Transaction Set Purpose Code 00), WebSDR was unable to process a 

forwarding action. The expectation was that an improperly addressed SDR submission would be 

rejected and the submitter directed to resubmit to the correct action activity. Capability to 

forward historical SDRs was identified as a planned improvement to SDR processing, but this 

functionality was not made available until June 19, 2015.

Staffing Note 3: If the SoS responds to the customer prior to transmitting the Reply Code 504 

forwarding reply, the new action activity will have no visibility of this reply. Navy SoS 

personnel may be unaware of this and sometimes direct issue reversal via SDR reply (thinking 

the distribution center will receive a copy of their SoS reply). Subsequently, upon realizing that 

the reversal was not processed, the Navy SoS follows up with the distribution center for 

completion of their request. Forwarding to the distribution center after sending a customer reply

causes confusion and delays since there is no business process to support transmission/

processing of these replies to the distribution center (either in WebSDR or DSS). Training must 

be provided to ensure Navy (and possibly Marine Corps) SoS PDREP users are aware of the 

expected transaction flow.

(c) If the distribution center is unable to determine the appropriate 

resolution of an SDR, the distribution center will use the applicable 300-series reply code (e.g., 

interim reply; SDR forwarded to USN for disposition instructions or final resolution) to forward 

the SDR to the SoS. WebSDR will provide a copy of this reply to the customer and transmit the 

reply (with its clarifying reply remarks) to the SoS. The SoS may now reply to the submitter, 

but, as stated above, the distribution center will have no visibility of the SoS reply.

(6) MILSBILLS. MILSBILLS procedures document that financial adjustments 

associated with SDRs will occur when the discrepancy report is validated and directed returns, 

where applicable, are received. However, it is current DLA practice to grant credit upon 

validating the discrepancy and prior to the return, thereby allowing the customer to reorder, when 

required, without exceeding their budgetary restrictions. The SoS must then monitor for the 

directed return. If materiel is not received, the SoS will re-bill for the quantity not returned. 
Attachment, ADC 1160

Page 8

1. Unique Item Tracking (UIT). The procedures for DLA 

distribution center processing under the Navy depot-level reparable (DLR) UIT program include

an exception prohibiting the use of the distribution center prepared issue reversals.

Staffing Note 4: Under PDC 1160, research was requested to understand the reason for this 

exception, determine if there is a broader implication for materiel requiring serialized item 

tracking under the DOD item unique identification (IUID) program, and integrate applicable 

procedures within this proposal. PDC 1160 requested the Navy provide additional clarification.

 - The Navy has no documentation for the referenced UIT exception, and UIT is not a 

reason to prevent a DLA-issued reversal.

- After additional research it was determined that the DLA Distribution prohibition on 

issue reversal for Navy DLR UIT items was procedural and not systemic, as originally believed. 

As a result, the Navy confirmed that issue reversal for their DLR UIT program should be 

allowed.

- Prior to implementation, DLMSO recommended, and Navy agreed to pursue, a test be 

to confirm that there are no unforeseen negative impacts on the UIT program when a DLR issue 

is reversed.

c. Approved Change in Detail:

(1) SDR. Revise the SDR reply code set as follows with the goal of using codes 

specific to the intent (rather than grouping the all variations under a single code). Refer to 

Enclosure 3.

(a) Add new 500-series interim Reply Code 525 for use by the storage 

activity to “recommend” to the SoS that credit be provided. This code must be used in 

combination with the existing 300-series forwarding reply code applicable to the SoS to clearly 

inform all parties that the responsibility for action has transferred to the SoS.

(b) Modify the current dual purpose Reply Code 101 explanation to 

restrict use for when credit is authorized. This code will be used by the SoS when issuing a 

financial adjustment under MILSBILLS; it will no longer be used by the storage activity. The 

restriction for use of Reply Code 101 by the SoS will be applicable to SDRs prepared after 

implementation of this ADC; therefore, it must be recognized by all parties that the dual 

interpretation for credit recommended/authorized remains in effect for SDRs prepared prior to 

the scheduled implementation date.

(c) Add new Reply Code 152 for use by the storage activity to indicate 

that credit will be provided as the result of an issue reversal.

(2) Issue Reversal Reason Code 

(a) Revise the reason for reversal code set to establish new codes 

indicating reversal due to shortage, wrong item, unsuitable/unusable condition, or a reason not 

otherwise identified, inclusive of incorrectly entered data, e.g., transposed characters. 

Additionally, update to indicate mandatory DoD-wide use for these reasons (removing the 

current restriction for Navy use only) and to delete an obsolete Navy-use code. Refer to 

Enclosure 4. 

Staffing Note 5: Navy to provide acceptable implementation date for removal of the obsolete 

Navy Issue Reversal Reason Code R. 

 - Navy Feedback: Navy Issue Reversal Reason Code R was removed when the last U2 
Attachment, ADC 1160

Page 9

system was subsumed into Navy ERP. However, Navy no longer supports the use of issue 

reversal reason codes. Navy ERP will need to be modified to support this data element under the 

ADC requirements.

(b) Incorporate issue reversal procedures in DLMS Volume 2 and 

MILSTRAP guidance to clarify authorized usage. The storage activity may generate the issue 

reversal to correct erroneous input or to reverse the original issue in response to a validated SDR 

for shortage, wrong item, or issue in an unsuitable condition requiring replacement. When used 

in response to a validated SDR, the reason reversal code must be included. This transaction will 

serve the dual purpose of re-instating the original demand within the requiring activity and will 

trigger credit for the original sale. It will be retained for audit history. Refer to procedures in 

Enclosures 1 and 2.

(3) Prepositioned Materiel Receipt (PMR). This change clarifies that the SoS 

must prepare a PMR for all directed returns to DLA Distribution Centers. This is required even 

when the distribution center has delegated authority to direct the return, as well as when the SoS 

directs the return. When the distribution center directs discrepant materiel return in conjunction 

with issue reversal, the SoS must monitor for the receipt of the discrepant materiel. If materiel is 

not returned, it is the responsibility of the SoS to follow-up by contacting the customer.

d. Revisions to DLM 4000.25 Manuals:

(1) DLM 4000.25, DLMS, Volume 2, Supply Standards and Procedures, 

revisions are shown at Enclosure 1.

(2) DLM 4000.25-2, MILSTRAP, chapter revisions (procedures) are shown at 

Enclosure 2.

(3) DLM 4000.25, DLMS, Volume 2, SDR code revisions are shown at 

Enclosure 3.

(4) DLMS implementation convention (IC) revisions are shown at Enclosure 4.

(5) DLM 4000. 25-2, MILSTRAP (and associated DLMS Data Dictionary entry), 

reason for reversal code revisions are shown at Enclosure 5.

(6) DLM 4000. 25-2, MILSTRAP, format revisions are shown at Enclosure 6.

(7) DLM 4000.25, DLMS, Volume 4, Military Standard Billing System –

Finance, chapter revisions are shown at Enclosure 7.

e. Process Flow: Refer to Enclosure 8.

f. Alternatives: None identified.
Attachment, ADC 1160

Page 10

5. REASON FOR CHANGE:

a. This change will establish a more appropriate process for wholesale issues from stock 

and support DLA Audit Readiness.

b. This change provides guidance for recognizing the actions taken or required based 

upon the storage activity response and subsequent correct processing of financial adjustments,

where applicable, resulting from supply discrepancies. 

6. ADVANTAGES AND DISADVANTAGES:

a. Advantages: 

(1) This change establishes specific SDR reply codes and associated procedures 

for use in providing credit for discrepant materiel. 

(2) This supports visibility of authorized use of the issue reversal as a mechanism 

for issuing credit resulting from validated supply discrepancies.

b. Disadvantages:

(1) Requires training for appropriate use of revised discrepancy codes and 

reversal reason codes.

(2) Components lacking an integrated logistics system may need to develop 

manual procedures to submit the PMR in response to a distribution center disposition reply 

directing return of discrepant materiel and to monitor for the receipt of this materiel. 

7. ADDITIONAL COMMENTS TO CONSIDER:

a. The necessary supply and financial transactions that must be used in place of issue 

reversals are fully supported by supply and finance systems where issues from wholesale stock 

apply. However, when DLA Distribution Centers issue below wholesale stock under direction of 

the Air Force to Air Force maintenance activities, the required MILSBILLS transactions to 

provide credit are not available at this time. Systemic interfaces are also not available to 

recognize that the original requirement has not been satisfied and must be re-instated.

b. Billing offices processing financial adjustments based upon SDRs should move 

forward with implementation of ADC 280 (Reference 3.g.) which also contributes to a clear 

audit trail by establishing Type of Bill Code WP (bill to adjust the amount previously billed due 

to approval of a SDR). A separate PDC supporting staggered implementation of this change is 

under consideration.

c. Timing of Issue Reversal Associated with Directed Returns of Discrepant 

Materiel 

(1) It may be appropriate to revise DLA Distribution internal procedures to 

prepare the issue reversal for validated SDRs concurrent with the SDR reply (when directed 

return of discrepant materiel is applicable), rather than delaying the issue reversal until the 

discrepant materiel is received. This would be applicable to Navy, Marine Corps, and Air Force 

SDRs as authorized by Component procedures, but would exclude Security Assistance SDRs. 
Attachment, ADC 1160

Page 11

This will provide immediate credit to the customer which is consistent with current practice for 

DLA-directed shipments and will eliminate the need for multiple inventory adjustments when the 

materiel is returned. The advantages of this approach are as follows: 

(a) Customers (excluding Security Assistance) would receive credit 

immediately after a validated SDR is processed by the SoS, thereby minimizing financial impact 

of re-requisitioning the required materiel.

(b) DLA Distribution Centers will no longer need to process the “extra” 

inventory adjustment to maintain an accurate inventory balance. This is significant because the

inflated number of inventory adjustments is misleading when assessing storage activity 

performance. There would also be a cost avoidance associated with eliminating the extra steps 

for the distribution center.

Staffing Note 6: Clarification of “extra” inventory balances: Inventory balances are corrected

immediately upon investigation of the discrepancy. Subsequently, when discrepant materiel is 

returned and the distribution center processes an issue reversal, it systemically generates an 

inventory adjustment (gain) which causes the records to reflect an incorrect balance. The 

distribution center must then submit an inventory adjustment (decrease) to put records back into 

accurate balance.

Staffing Note 7: Under PDC 1160, Air Force, Navy, Marine Corps and DLA Distribution were

requested to consider the above approach for immediate issue reversal when directing return of 

discrepant materiel in coordination with their audit readiness team to determine if this is worth 

pursuing. No significant feedback was received.

d. Expanded DOD use of Reason for Reversal Code S. Request Components evaluate 

expanded DOD-wide use of Reason for Reversal Code S currently restricted for Navy use. 

Provide feedback in response to this ADC. Navy uses Reason for Reversal Code S to identify 

reversal of an issue transaction when a cancellation request has been issued for a 

material/disposal release order (MRO/DRO) and the item was not yet shipped. Reversal 

requirement stems from a timing issue. The MRO/DRO is in process, the depot accountable 

balance has been decremented and the issue transaction has been sent to the ICP to decrement to 

the owner balance. Subsequent to this action, but prior to the material being physically shipped 

and a confirmation being generated, the MRO/DRO issue action is cancelled and the material is 

returned to stock, if necessary. A D7_issue reversal transaction is then required to increment the 

depot's accountable balance and the ICP's balance to the original quantity.

e. Consider expanding use of the reason for reversal code to the other DLMS 

transactions that can be reversed. As a minimum, consider a code for reversal due to erroneous 

entry (e.g., transposed digits when entering transaction), which is the common reason for 

reversing a transaction.

8. ESTIMATED TIME LINE/IMPLEMENTATION TARGET:

a. Reply Code Revisions. All systems interfacing with WebSDR must update their 

internal reply code table for joint implementation on April 1, 2016. The combination of Reply 

Code 525 (Discrepancy validated by storage activity; credit recommended) and the 300-series 

forwarding reply must be implemented by DLA Distribution Centers for wholesale level issues 

as soon as these codes become available. DLA Distribution Centers must terminate use of 

Reply Code 101 (Credit authorized by SoS/manager) and transition to use of Reply Code 152 
Attachment, ADC 1160

Page 12

(Discrepancy validated by storage activity; credit processing associated with issue reversal) as 

soon as Reply Code 152 becomes available.

b. Issue Reversal Reason Codes. Services/Agencies must provide implementation

timeline for expanded use of issue reversal reason codes. DLA Distribution Center 

implementation must be expedited for audit readiness. Expedited implementation is requested 

for those Services relying on DLA Distribution Center issue reversal processing for discrepant 

systems. At the latest, this process must be implemented by systems receiving the issue reversal 

for DLMS compliance by December 2019.

c. Staggered implementation and Transaction Services Processing Requirements. 

In order to allow a staggered implementation of the reason for reversal codes within Component 

systems, the implementation plan is to use Defense Automatic Addressing System (DAAS) 

mapping to either perpetuate or drop the issue reversal code based upon Component capability

and DLMS implementation status. This will allow the storage activity to apply the correct values 

while only perpetuating to the Component recipient when their system can support the reason for 

reversal data element and/or code values or the inclusion of the reason for reversal code does not 

negatively impact transaction processing. Unless otherwise requested by the Component, DAAS 

will perpetuate the reason for reversal to DLMS formatted transactions and drop the value during 

conversion to legacy formatted transactions.

9. ESTIMATED SAVINGS/COST AVOIDANCE ASSOCIATED WITH 

IMPLEMENTATION OF THIS CHANGE: Not available. This change is recommended by 

the DLA Audit Readiness Team.

10. IMPACT:

a. New DLMS Data Elements: None identified.

b. Changes to DLMS Data Elements: Revise SDR reply codes as shown in Enclosure 

3. Revise reason for reversal codes as shown in Enclosure 5.

c. Automated Information Systems (AIS):

(1) All Component SDR systems must recognize SDR reply code updates as 

indicated. In addition, Component applications must recognize reason for reversal codes 

identified in issue reversals. 

(2) Systemic support for creation of PMRs and monitoring for receipt of directed 

returns must be developed.

d. Transaction Services: 

(1) WebSDR must adopt SDR reply code updates as indicated. No new edits on 

use of reply codes is requested at this time.

(2) DAAS mapping for the issue reversal reason code to be updated for the 

approved change based upon Component response to implementation requirements. Current 

mapping is shown for clarification. Refer to staggered implementation plan discussed in 

paragraph 8.
Attachment, ADC 1160

Page 13

867 I PRODUCT TRANSFER AND RESALE REPORT

D7/DZK BG1/BG2

Field Name

Record 

Position 

(DLSS)

Conditions DLMS Data 

Element

Table Updated

Reason for 

Reversaled Code

80 If RP1-2=D7 and RP4=N, P, Q, R and 

RP80=S, B, R

LQ01=Z

LQ02=RP 80

2 ADC 259

7/20/09

e. Non-DLM 4000.25 Series Publications: Revision will be required to update 

internal operating and training procedures.

11. PROPOSED DLMS CHANGE (PDC) 1160 STAFFING RESPONSE/COMMENT 

RESOLUTION:

Originator Response/Comment Disposition

1. Marine Corps Concur with comment:

MCSC Supply is already in compliance. 

In response to the Staffing Note on partial reversal the Marine 

Corps provided the following information (including specific 

questions and answers as shown):

The Marine Corps has partially implemented the partial reversal 

process. The USMC wholesale system (Stock Control System) 

has implemented partial reversal for D8/D9 transactions, but does 

not execute partial reversal for issues of materiel.

Our retail systems have not implemented the partial reversal.

Q1: Do you know what happens if DSS sends a partial reversal 

for a D7 to wholesale (based upon DSS feedback, it seems like 

they are generating these to MPB for credit after validating an 

SDR for shortage). 

A1: SCS does not permit outside entities from submitting 

financial adjustments (D7*) to the Navy Working Capital fund 

ledger. D7* transactions are a byproduct of and A0* issue. The 

D7* is generated and staged when the A5* is released to the sub 

RSA holding the assets. Once SCS receives an AR* from the 

sub RSA, the D7* transactions is released to our Stores financial

accounting system. Partial reversal would have to from the RSA 

notifying SCS that they were unable to accomplish the complete 

issue. In turn a D7* (partial adjustment) would be made within 

SCS. A D7* transactions coming from DLA is incorrect and not 

allowed in SCS. 

Q2: Do you have timeline for implementation of partial reversal 

for issues/is there a systems change request documenting the 

requirement?

A2: I am not aware if the Air Force has accomplished any 

coding related to this issue. The Marine Corps is in the process 

of working with DPAS (warehouse module) to build in reversal 

capability. As for DSS, I am not aware of any attempt to provide 

a like capability.

Recommend a meeting be conducted between the Air Force, 

DLA DSS, and the Marine Corps to discuss the way ahead on the 

Noted.

While the MC does support use of the 

issue reversal process, the expanding use 

of the issue reversal code in transactions is 

a new requirement.
Attachment, ADC 1160

Page 14

Originator Response/Comment Disposition

mandate.

2. Navy Navy concurs with the following comments:

1. Regarding Staffing Note 1, Navy implemented the partial 

reversal process documented in AMCL 13 in 2001.

2. Regarding Staffing Note 4, Navy has no documentation for the 

referenced Unique Item Tracking (UIT) exception, and UIT is 

not a reason to prevent a DLA-issued reversal.

3. Regarding Staffing Note 5, Navy Issue Reversal Reason Code 

R was removed when the last U2 system was subsumed into 

Navy ERP.

4. Regarding the implementation timeline for expanded use of 

issue reversal reason codes referenced in 8.c., the Navy no longer 

uses issue reversal reason codes. Navy ERP does not make use 

of these codes, and there are no plans to implement them.

 

5. Navy disagrees with the process as depicted in Enclosure 8. 

We do not believe that it is appropriate to do both a receipt and 

an issue reversal due to it also requiring an inventory adjustment 

to offset the duplicate inventory increase. Recommend that 

services either use the process of sending a PMR and the DD 

generating a receipt or use the process of the DD generating an 

issue reversal based on the attached SDR paperwork. Either 

process can be considered appropriate for a service to use. The 

receipt process causes some problems with measuring Logistics 

Response Time (LRT) and DAAS reports showing completion of 

the order due to the receipt being posted. The issue reversal 

process avoids the problems with LRT and DAAS reports and is 

the preferred method for the Navy to use since it also handles the 

financials well for the activity that ordered the material, keeps the 

order open for the customer and prevents any double counting of 

demand.

Navy requests the ADC be updated to include the third digit of 

the legacy DIC to clarify which inventory adjustment

transactions apply. Navy would also like clarification on other 

coding in the inventory adjustment that identifies the scenario. 

Noted.

1. Noted.

2. Noted. DLA has been asked to 

evaluate impact of removing the exception 

for reversal of UIT (and future item unique 

identification (IUID) implementation.

3. Noted.

4. The expectation is that the Navy will 

implement the ADC; however, procedures 

are designed for staggered implementation. 

The intent is for DSS to implement the 

issue reversal reason codes and for 

Transaction Services to perpetuate to 

DLMS systems. If the Navy is not ready 

to accept the codes they will not be 

available for internal research.

DSS will provide DLMS 947I Inventory 

Adjustment equivalent to legacy 

D8A/D9A. This is type of inventory 

adjustment transaction is applicable upon 

initial research upon processing/validation 

of the SDR in order to correct inventory 

balances. The same type of decrease 

(D9A) is applicable upon return of a 

wrong item received followed by issue 

reversal which results in the inventory 

balance being inappropriately increased.

Note: For Increase (D8_), DLMS 

transactions use 2/W1916/0202 Inventory 

Transaction Type Code AJ -Inventory 

Adjustment Increase applies.

For Decrease (D9_) DLMS transactions 

use 2/W1916/0202 Inventory Transaction 

Type Code AD-Inventory Adjustment 

Decrease applies.

The Physical Inventory Error 

Classification Codes will differ based 

upon the circumstance. The first position 

will always be a '2' for Issue as outlined in 

MILSTRAP Appendix B18, but the 

second and third characters can and should 

be tailored to the individual incorrect 

process that created the resultant SDR and 

corrective adjustment. For example, for a 

wrong item shipment, Physical Inventory 

Error Classification Code 2M (Issue -

Materiel Selected from Wrong Location) 

or 2L (Issue - Wrong Materiel Selected)
Attachment, ADC 1160

Page 15

Originator Response/Comment Disposition

may apply. For shortage, the Error 

Classification Code should be 2S (Issue -

Erroneous Count).

3. Army Concur

(Supply PRC and Army SDR community concur)

Army clarified that the issue reversals that are included in the 

PDC are DIC D7_ reversals, which should not affect LMP. (The 

Army has never used D7_s the way some of the other Services 

do.) The Army never developed the functionality in LMP, so the 

short answer to the staffing note is that no, the Army cannot 

process partial issue reversals.

Noted

4. DLA DLA concurs with the below comments. 

PDC paragraph 4.b.3.b.d.7- DLA would like to reiterate that 

once an item is archived, a reversal cannot be processed.

PDC paragraph 4.b.4.c.2.b- This process will not work 

appropriately if AF uses "M" document numbers; Air Force must 

cease use or DLMSO must outline procedures to accommodate 

these document numbers.

Navy DLR Issue Reversal: Program P8AX allows for Issue

Reversals and works with UIT/UII items

After further research, DLA Distribution confirmed that partial 

issue reversals are restricted to SDR returns for Navy and Air 

Force maintenance activities.

Noted.

A new sub-paragraph has been added to 

the Service-specific Background for Air 

Force.

“2. When Air Force materiel is issued for 

Air Force maintenance under the nonstandard document number construct 

beginning with the letter “M” (rather than 

an Air Force Service/Agency Code), the 

issue reversal process is applicable to Air 

Force-directed issues. The Air Force 

maintenance document numbers beginning 

with the letter M cannot be used on an 

inter-Service basis. This document 

number construct is invalid under DOD 

rules. The Air Force has been asked to 

discontinue this practice.”

Navy DLR UIT Program Background has 

been updated. DLMSO is recommending 

DLA Distribution and Navy jointly test the 

issue reversal for impact on the Navy DLR 

UIT interface.

5. Air Force Concur with comment:

In response to Staffing Note 1 - ILS-S does NOT do partial 

reversal, reversals are processed for the complete quantity and 

then re-processed with the correct quantity/condition/identity. 

ILS-S will not be implementing AMCL 13; however, will re-look 

when this is re-issued as an ADC.

Noted.

6. Transaction 

Services

Enclosure 3, Page 1, PDC1160, is the 2nd sentence supposed to 

be "2" so that the 525 Reply Code refers to the 2nd sentence?

1 Not authorized for use by storage activities upon 

implementation of ADC 1160.

1 Authorized for use upon implementation of ADC 1160; must 

be used in conjunction with 300-series forwarding reply code to 

transfer action to the SoS.

Reference above,

Is this requiring WebSDR to block anything if a storage activity 

uses?

Is this requiring WebSDR to block/reject if reply code is not used 

in conjunction with 300-series?

No WebSDR edit is requested at this time. 

The intent is for the responding activity to 

enforce correct use of the revised/new 

codes.

The reason for reversal code revisions will 

not impact the SDR transaction 

processing.
Attachment, ADC 1160

Page 16

Originator Response/Comment Disposition

I was unclear if SDR needs to do anything for the following 

requirement, could you let me know. I was thinking no, but 

wanted to confirm:

(a) Revise the reason for reversal code set to establish new codes 

indicating reversal due to shortage, wrong item, 

unsuitable/unusable condition, or a reason not otherwise 

identified, inclusive of incorrectly entered data, e.g., transposed 

characters. Additionally, update to indicate mandatory DoDwide use for these reasons (removing the current restriction for 

Navy use only) and to delete an obsolete Navy-use code. Refer 

to Enclosure 4.

7. USTRANSCOM Abstain. There is no impact to USTRANSCOM systems based 

on this change.

Noted.
Enclosure 1, ADC 1160

Page 1

Enclosure 1, DLMS Volume 2 Chapter Revisions

Changes are identified by bold red italics and strike-though text. Intervening text between updated 

paragraphs is not shown. Paragraphs will be renumbered as appropriate due to identified revisions.

A. Revise DLM 4000.25, Volume 2, Chapter 14, Issue, Loan, Demand, and Single Manager for 

Conventional Ammunition Freeze/Unfreeze Action, as shown.

“Revise DLM 4000.25, Volume 2, Chapter 14, as shown.

“C14.2. ISSUE

C14.2.1. General

C14.2.1.1. This section provides a standard procedure for processing Issue information to 

owner/inventory control point (ICP) for the purpose of:

C14.2.1.1.1. Updating the owner/ICP record.

C14.2.1.1.2. Recording the appropriate financial transaction. Conformance with 

standard line of accounting (SLOA)/accounting classification requires any initiation of a financial business 

event to include SLOA mandated standard financial information system (SFIS) elements.3 The DLMS 

issue transaction supports inclusion of SLOA required elements. Pending full implementation of SLOA, 

Transaction Services will facilitate interoperability by updating selected SLOA data fields based upon the 

initiating activity’s Service/Agency and Fund Code.

C14.2.1.1.3. Providing a basis for billing the customer.

C14.2.1.2. Processing points receiving requisitions, passing actions, follow-ups and 

cancellations, irrespective of format or method of transmission, will process such transactions in 

accordance with their respective internal procedures. 

C14.2.1.3. Internal processing methods may vary due to automated capability and related 

procedures; however, the formats for output from processing point to requisitioner and between processing

points will use the formats prescribed in this manual.

C14.2.1.4. Issue transactions are used to convey issue data to the ICP. Issue Transactions 

resulting from a backorder release are identified by Issue Transaction related Management Code M.

C14.2.1.5. Materiel from an Army Medical Materiel Agreement (AMMA) site may be 

issued using local catalog identification numbers.

[Intervening text not shown]

 3 Refer to ADC 1043.
Enclosure 1, ADC 1160

Page 2

C14.2.5. Issue Reversal 

C14.2.5.1. Issue reversals are used to correct owner and storage activity inventory records 

due to erroneous input by the storage activity.

C14.2.5.2. By Component agreement, issue reversals are authorized as a method to adjust 

inventory balances as the result of a validated supply discrepancy report (SDR). The issue reversal 

transaction will serve as an auditable record of this action within storage activity and owner systems. 

When used for this purpose the storage activity must include the reason for reversal code in the issue 

reversal transaction to indicate a correlation with a supporting discrepancy report. Issue reversals used 

to adjust inventory records will systemically trigger a financial adjustment by the owner system, when 

applicable, for discrepant shipments including, but not limited to, shortage, wrong item, or incorrect 

condition. The issue for wrong item shipments will not be reversed until after the incorrect materiel has 

been returned to the storage activity (with exception by direction of the ICP to correct records where a 

wrong item received is not returned).

4

C14.2.5.3. Navy use only. Storage activities will cite Reason for Reversal Code S in the 

issue reversal transaction when a cancellation request is issued for a materiel/disposal release order 

(MRO/DRO) and the item was not shipped. The reversal requirement stems from a timing issue. The 

MRO/DRO is in process, the storage activity property accountability record was decremented and the 

issue transaction was sent to the ICP to decrement to the owner balance. Subsequent to this action, but 

prior to the materiel being physically shipped and a materiel release confirmation being generated, the 

MRO/DRO issue action is cancelled and the materiel is returned to stock, if necessary. An issue reversal 

transaction is then required to increment the storage activity’s property accountability record and the 

ICP's record to the original quantity.

B. Revise DLM 4000.25, Volume 2, Chapter 17, Supply Discrepancy Reporting, as shown.

“C17.3.12.1.2.1. Interim Replies. Interim replies may be used to inform the 

submitter that an SDR has been forwarded to another organization for investigation or resolution. 

Responsible activities must provide an interim reply where a final reply cannot be provided within the 

established timeframes. Failure to meet the established timeframes must be caused by reasons outside the 

control of the ICP/IMM or GSA. Such interim replies will indicate when additional status will be provided. 

Identify the interim disposition/status using the appropriate Reply Code (Appendix 7.28). The storage 

activity will provide an interim reply when recommending credit be provided by the SoS based upon a 

validated discrepancy. For this purpose, the storage activity will cite Reply Code 522 and forward the 

SDR using the applicable 300-series applicable to the SoS for processing of MILSBILLS financial 

adjustments under Volume 4, Chapter 4. When the storage activity forwards an SDR to the SoS for action 

using a 300-series interim reply code, the SDR transaction must be formatted to identify the SoS RIC as the 

action activity. WebSDR will provide notification of forwarding action to the SDR initiator. If no coding 

exists to specifically identify the reasons for the delay, select Code 137 and provide a clear-text 

explanation.

(Intervening text not shown)

C17.3.12.1.3. DoD ICP/IMM, Shipping Depot, or GSA Actions. The ICP/IMM, or 

shipping depot, or GSA will:

 4 Refer to ADC 1160.
Enclosure 1, ADC 1160

Page 3

C17.3.12.1.3.1. Review all SDRs received for processing and determine 

proper course of action based on available supply records and the results of investigation. This includes 

SDRs which the customer has reported as requiring no action (Action Code 1H or 3B).

C17.3.12.1.3.2. Provide the SDR response to include disposition instructions 

as needed to the customer or the ILCO for Security Assistance SDRs. The responsible activity will provide 

point of contact information for each SDR response.

C17.3.12.1.3.3. Based upon validated SDRs, the storage activity may 

reverse the original issue or adjust inventory balances, as applicable. Prior coordination with the 

ICP/IMM is required for use of issue reversals as a means of correcting records and providing credit to 

the billed party. The ICP/IMM is responsible for providing a PMR to the distribution center when the 

SDR reply (prepared by the SoS or distribution center) directs return of discrepant materiel. Based upon 

validated SDRs, the ICP/IMM may request that DFAS or integrated financial process authorize 

adjustment/credit in accordance with MILSBILLS procedures in DLM 4000.25, Volume 4, Military 

Standard Billing System - Finance. Failure to comply with instructions to return discrepant materiel will 

result in billing for materiel received.

C17.3.12.1.3.3.1. The storage activity may recommend credit/debit

via interim reply forwarded to the SoS (must include applicable 300-series reply code). The storage 

activity response will be based upon research to include review of inventory records and physical 

inventory, as appropriate. WebSDR will provide an information copy of the storage activity reply to the 

SDR submitter. 

C17.3.12.1.3.3.2. Upon receipt of a storage activity 

recommendation, the SoS will conduct further research (supply and financial records) and provide a 

final reply to the SDR submitter indicating credit/debit is authorized or denied, as appropriate.”
Enclosure 2, ADC 1160

Page 1

Enclosure 2, MILSTRAP (Legacy) Chapter Revisions

Revisions are identified by red bold italics and strike through.

A. Revise DLM 4000.25-2, Chapter 3, as shown. 

“C3.2. ISSUE TRANSACTIONS 

C3.2.1. Issue transactions are used to convey issue data to the ICP or Integrated Materiel Manager 

(IMM). Issue transactions are identified by document identifier codes (DIC) in the D7 series that are 

assigned and explained in appendix AP2.1. Issue transactions resulting from a backorder release are 

identified by issue transaction related Management Code M in record position 72 (Appendix AP2.6). See 

appendix AP3.3 for transaction formats.

C3.2.2. Issue Reversal 

C3.2.2.1. Issue reversals are used to correct inventory records due to erroneous input by 

the storage activity.

C3.2.2.2. By Component agreement, issue reversals are authorized as a method to adjust 

inventory balances as the result of a validated supply discrepancy report (SDR). The issue reversal 

transaction will serve as an auditable record of this action within storage activity and owner systems. 

When used for this purpose the storage activity must include the reason for reversal code in the issue 

reversal transaction to indicate a correlation with a supporting discrepancy report. Issue reversals used 

to adjust inventory records will systemically trigger a financial adjustment by the owner system, when 

applicable, for discrepant shipments including, but not limited to, shortage, wrong item, or incorrect 

condition. The issue for wrong item shipments will not be reversed until after the incorrect materiel has 

been returned to the storage activity (with exception by direction of the ICP to correct records where a 

wrong item received is not returned).

5

C3.2.2.3. Navy use only. Storage activities will cite Reason for Reversal Code S in the 

issue reversal transaction when a cancellation request is issued for a materiel/disposal release order 

(MRO/DRO) and the item was not yet shipped. Reversal requirement stems from a timing issue. The 

MRO/DRO is in process, the storage activity property accountability record was decremented and the 

issue transaction was sent to the ICP to decrement to the owner balance. Subsequent to this action, but 

prior to the materiel being physically shipped and a materiel release confirmation being generated, the 

MRO/DRO issue action is cancelled and the materiel is returned to stock, if necessary. A D7_issue 

reversal transaction is then required to increment the storage activity’s property accountability record

and the ICP's record to the original quantity.

6

 5 Refer to ADC 1160. 6 Refer to ADC 259.
Enclosure 2, ADC 1160

Page 2

B. Revise DLM 4000.25-2, Chapter 9, as shown. 

C9.4. TRANSACTION REVERSAL. Table C9.T1 identifies MILSTRAP transactions authorized for 

reversal. The DLMS Supplements implementation conventions (ICs) for the corresponding functionality 

are also authorized for reversal:. Where applicable, specific procedures related to the authorized use of a 

reversal transaction are included with the relevant chapter narrative.

C9.4.1. See Chapter 3 for specific procedures and controls required when reversing Issue 

transactions.

C9.4.2. See Chapter 7 for specific procedures and controls required when reversing Inventory 

Adjustment (Physical Inventory) transactions, DIC D8A/D9A.

Table C9.T1 MILSTRAP Transactions Authorized for Reversal

APP DIC Corresponding 

DLMS

Title of Transaction Authorized for Reversal

AP3.1 D4_ 527R Receipt Materiel Receipt – Procurement Instrument Source

AP3.2 D6_ 527R Receipt Materiel Receipt – Other Than Procurement 

Instrument Source

AP3.3 D7_ 867I Issue Issue

AP3.4 D8_, D9_ 947I Inventory 

Adjustment

Adjustment – Increase or Decrease

AP3.5 D8E,D8F, 

D9E,D9F

947I Inventory 

Adjustment

Inventory Adjustment – Increase or Decrease 

(Logistics Transfer/Capitalization/Decapitalization)

AP3.6 D8S,D9S 947I Inventory 

Adjustment

Inventory Adjustment – Increase or Decrease 

(Ownership Transfer)

AP3.7 DA1,DA2 846F Ammunition 

Freeze/Unfreeze

Single Managed Conventional Ammunition 

Freeze/Unfreeze Action

AP3.8 DAC, DAD 947I Inventory 

Adjustment

Inventory Adjustment – Dual (Condition/Purpose 

Transfer)

AP3.9 DAS 947I Inventory 

Adjustment

Inventory Adjustment – Dual (Ownership Transfer)

AP3.10 DD_ 527D Due-In Due-In – Procurement Instrument Source 

AP3.11 DEE,

DEF

846D Logistics 

Reassignment 

Transfer and 

Decapitalization

Logistics Transfer/Decapitalization

AP3.12 DF_ 527D Due-In Due-In – Other Than Procurement Instrument 

Source

AP3.13 DG_ NA Backorder

AP3.14 DHA 867D Demand Demand
Enclosure 2, ADC 1160

Page 3

Table C9.T1 MILSTRAP Transactions Authorized for Reversal

APP DIC Corresponding 

DLMS

Title of Transaction Authorized for Reversal

AP3.38 DU_ 527D PMR Pre-Positioned Materiel Receipt (PMR) –

Procurement Instrument Source

AP3.39 DW_ 527D PMR PMR – Other Than Procurement Instrument Source

AP3.54 DZC 846S Logistics 

Reassignment 

Storage Information 

Order

Logistics Reassignment Storage Information

AP3.55 DZD 846S Logistics 

Reassignment 

Storage Information 

Reply

Logistics Reassignment Storage Information Reply
Enclosure 3, ADC 1160

Page 1

Enclosure 3, DLMS Appendix Updates

Revisions are identified by red bold italics and strike through.

Revise DLM 4000.25, Volume 2, Appendix 7.28, Supply Discrepancy Report Relevant Data Elements, as 

shown.

AP3.4 DISCREPANCY STATUS OR DISPOSITION (REPLY) CODES 

Action activities use the Discrepancy Status or Disposition (Reply) Codes to codify a response to an SDR. 

This data element may be referred to as an SDR Reply Code. It is a three position numeric code. Up to 

three reply codes may be used on a single report to provide complete financial and materiel disposition 

instructions and provide additional information as needed. Codes may be used to replace or supplement 

preprinted information on the reverse side of the SF 364. System design should accommodate clear text for 

ease of use and interpretation.

Reply Codes

The 100-series codes provide status of financial resolution, materiel disposition instructions, or other 

appropriate information: 

101 Credit authorized/recommended by SoS/manager 1

152 Discrepancy validated by storage activity; credit processing associated with issue reversal 2

---------------

The 300-series codes indicate storage activity status on SDRs forwarded to the owner/manager for action:

301 Interim reply; SDR forwarded to USA for disposition instructions or final resolution.

302 Interim reply; SDR forwarded to USAF for disposition instructions or final resolution.

303 Interim reply; SDR forwarded to USMC for disposition instructions or final resolution.

304 Interim reply; SDR forwarded to USCG for disposition instructions or final resolution.

305 Interim reply; SDR forwarded to USN for disposition instructions or final resolution.

306 Interim reply; SDR forwarded to GSA for disposition instructions or final resolution.

307 Interim reply; SDR forwarded to DLA for disposition instructions or final resolution.

309 Interim reply; SDR forwarded to owner for disposition instructions or final resolution

--------------

The 500-series (and some 100-series) codes indicate an interim reply:

525 Discrepancy validated by storage activity; credit recommended (use with 300-series forwarding 

reply code) 3

----------------

1 No longer authorized for use by storage activities upon implementation of ADC 1160.

2Refer to ADC 1160. 3 Refer to ADC 1160.
Enclosure 4, ADC 1160

Page 1

Enclosure 4, DLM Implementation Convention (IC) Revisions

# Location DLMS 867I Revision Reason

1. DLMS 

Introductory 

Notes

Add to DLMS introductory note 3:

- ADC 1160, Procedures for Recommending and 

Authorizing Credit for Validated SDRs, Associated 

Reply Code Revisions, and Required use of the Reason 

for Reversal Code in Issue Reversals

Identifies change 

associated with the 

transaction.

2. 2/LQ01/270 Revise DLMS Note for existing Code Z:

Z Cancellation Reason

DLMS Note: 

1. Use for the Reason for Reversal Code. 

2. Navy uses the Reason for Reversal Code for Navy issue 

reversal codes B, R, and S in support of legacy 

requirements. DLMS enhancement authorized for use by 

Navy and DLA Distribution Standard System (DSS) 

interface with Navy. Code R is only authorized for use with 

Navy’s legacy Uniform Automated Data Processing System 

(UADPS) 2 (U2), and only until such time as U2 is replaced. 

Code R is not authorized for use with other DOD 

Component legacy systems, or with any modernized 

systems. Refer to ADC 259.

3. By DLMS enhancement, DLA storage activities must cite 

the Reason for Reversal Code on all issue reversals 

associated with a validated SDR. Refer to ADC 1160. 

4. A data maintenance action was approved in version 5050. 

The approved code/name is “RRC – Reason for Reversal 

Code”.

To document 

enhancement for data 

requirement in DLMS. 

Currently, only Navy

uses this code when

interfacing with DLA 

DSS.

Under MILSTRAP 

Navy/DSS cite code in a 

multiuse field (rp80) 

designated for intraComponent use.

Staffing Note 8: 

Request Air Force 

evaluate impact of 

allowing this data 

element to be perpetuated 

to the legacy format 

received by AF systems.
Enclosure 5, ADC 1160

Page 1

Enclosure 5, DLMS, Volume 2, Appendix 7 (Code) Revisions, and associated DLMS Data Dictionary 

entry for Data Element ID 1270 Qualifier Z

Add new Appendix 7.30, Reason for Reversal Code. Red bold italics identify new codes; however, the 

entire appendix is new since a code appendix was not previously developed for this data element.

AP7.30 APPENDIX 7.30

REASON FOR REVERSAL CODE

NUMBER OF CHARACTERS: One

TYPE OF CODE: Alpha

EXPLANATION: Identifies the reason for reversal in applicable transaction.

LEGACY RECORD POSITION: 73 for DEE/DEF; 80 for D7_

DLMS SEGMENT/QUALIFIER: LQ Segment, LQ01 Data Element ID 1270,

Qualifier Z – Cancellation

MILSTRAP Document Identifier 

Code (DIC)

D7_; DEE/DEF

DLMS Implementation Convention 867I Issue

846D Logistics Reassignment Transfer/ Decapitalization (Report 

Type Code TL)

CODE NAME/DEFINITION APPLICABLE 

TRANSACTION EXPLANATION

A Reversal of logistics 

transfer/decapitalization 

transaction 

846D/DEE/DEF Logistics reassignment transfer and 

decapitalization transaction (when the quantity 

is not available for transfer/decapitalization)1

 

B Reversal of issue 

transaction – shortage

867I/D7_ Navy use only. Reversal of issue transaction 

when amount shipped is determined to be less 

than amount requested on a materiel/disposal 

release order (MRO/DRO)/issue transaction. 

C Reversal of issue 

transaction – condition

867I/D7_ Reversal of issue transaction when the 

condition of materiel shipped is not consistent 

with that requested on an MRO/DRO/issue 

transaction2

D

through 

R

Not assigned. Reserved for future DoD assignment.

 1 Refer to Request for Implementation Date for ADC 12. Not authorized for use; implementation pending.

2 Refer to ADC 1160..
Enclosure 5, ADC 1160

Page 2

CODE NAME/DEFINITION APPLICABLE 

TRANSACTION EXPLANATION

R Reversal of issue 

transaction 

Navy use only. Reversal of DLMS IC 867I 

(MILSTRAP DIC D7_) issue transaction when 

the customer has returned the material. 

Approved for limited interim use by navy U2 

legacy system and dss interface with U2. Code 

R is not authorized for use with other legacy 

systems or with any modernized systems. 

Authorization for use with Navy U2 system will 

be rescinded when Navy U2 system is replaced. 

S Reversal of issue 

transaction - cancellation

867I/D7_ Navy use only. Reversal of issue transaction 

(DLMS 867I (MILSTRAP DIC D7_)) when a 

cancellation request has been issued for a 

material/disposal release order (MRO/DRO) and 

the item was not yet shipped. Reversal 

requirement stems from a timing issue. The 

MRO/DRO is in process, the depot accountable

balance has been decremented and the issue 

transaction has been sent to the ICP to 

decrement to the owner balance. Subsequent to 

this action, but prior to the material being 

physically shipped and a confirmation being 

generated, the MRO/DRO issue action is 

cancelled and the material is returned to stock, if 

necessary. A D7_issue reversal transaction is 

then required to increment the depot's 

accountable balance and the ICP's balance to the 

original quantity.3

T Reversal of issue 

transaction - other

867I/D7_ Reversal of transaction for a reason not 

otherwise identified, inclusive of incorrectly 

entered data, (e.g., transposed characters).4

Staffing Note 9: Reason for Reversal code will 

be added to all DLMS –MILSTRAP related 

transactions that can be reversed, by a future 

PDC. At that time, Code T will be for use with 

all transactions authorized for reversal.

U

through 

V

Not Assigned Reserved for future DoD assignment.

 3 Refer to ADC 259, Revise DLMS Supplement 867I and MILSTRAP Issue Transactions to Support Navy Requirement for 

Reason for Reversal Code 4 Refer to ADC 1160.
Enclosure 5, ADC 1160

Page 3

CODE NAME/DEFINITION APPLICABLE 

TRANSACTION EXPLANATION

W Reversal of issue 

transaction – wrong item

867I/D7_ Reversal of issue transaction when materiel 

shipped is determined to be other than the type 

of materiel (e.g. wrong stock number) 

requested on an MRO/DRO/issue transaction5

X

through 

Y

Not Assigned Reserved for future DoD assignment.

Z Reserved Not available for assignment as a reason for 

reversal code.

 5 Ibid.
Enclosure 6, ADC 1160

Page 1

Enclosure 6, MILSTRAP Appendix 3.3 Issue (Format) Revisions

Revisions are identified by red bold italics and strike through.

Revise DLM 4000.25-1 Appendix 3.3 Issue as shown.

AP3.3. APPENDIX 3.3

ISSUE

FIELD LEGEND RECORD

POSITION(S)

ENTRY AND INSTRUCTIONS

Document Identifier 

Code

1-3 Enter appropriate DIC from the D7 series.

Routing Identifier Code 

(TO)

4-6 Enter RIC of the Inventory Control Point to 

which this transaction is being forwarded.

Media and Status 7 Enter M&S code from original document.

Stock of Part Number 8-22 Enter stock or part number of item issued.

Unit of Issue 23-24 Enter UI of item.

Quantity 25-29 Enter quantity issued, preceding significant 

digits with zeros.1, 2

Document Number 30-43 Enter document number from source document.

Suffix 44 Enter assigned suffix code; otherwise, leave 

blank.

Supplementary Address 45-50 Perpetuate from source document.

Signal 51 Perpetuate from source document.

Fund 52-53 Perpetuate from source document.

Distribution 54-56 Perpetuate from source document.

Project 57-59 Perpetuate from source document.

Priority 60-61 Perpetuate from source document.

Delivery Day 62-64 Perpetuate from source document.

Advice 65-66 Perpetuate from source document.

Routing Identifier Code 

(FROM)

67-69 Enter RIC of the storage activity from which the 

item is to be shipped.

Ownership/Purpose 70 Enter ownership/purpose code from which item 

is to be shipped.

 1

See Appendix AP3 - Formats Introduction, AP3.3.1 2 See Appendix AP3 - Formats Introduction, AP3.3.2. 
Enclosure 6, ADC 1160

Page 2

Supply Condition 71 Enter supply condition code from which item is 

to be shipped.

Management 72 Enter appropriate issue management code.

Day of Year 

(Transaction)

73-75 Enter ordinal day of the calendar year on which 

transaction is prepared.

Multiuse 76-8079 For intra-Component use, enter data prescribed 

by Component. For inter-Component use, leave 

blank.3,

Dual-Use

Multi-Use

Reason for 

Reversal

80

(80)

(80)

For intra-Component use, enter data prescribed 

by Component. 

For inter-Component use, leave blank

authorized for reason for reversal code for all 

DoD Components when reversing an Issue 

transaction.4, 5

 3 For Navy, rp 77 identifies the “issue on request” code. Navy uses when a customer receives material without a material release 

order and DSS sends a D7_ (with an “I” in position 77) to Navy systems (e.g., Uniform Automated Data Processing System 

(UADPS) II (U2) and Uniform Inventory Control Program (UICP) ) to indicate that material has been issued. (See ADC 235) 4 For Navy, rp 80 identifies the Navy Issue Reversal Code B,R, or S per legacy requirements. Navy uses when interfacing with 

DLA DSS. Code R is only authorized for use with Navy’s legacy Uniform Automated Data Processing System (UADPS) 3 

(U2), and will not be authorized for use with other DoD Component legacy systems, or with any modernized systems. (See 

ADC 259.) 5 Implementation staggered. Refer to ADC 1160.
Enclosure 7, ADC 1160

Page 1

Enclosure 7, DLMS Volume 4 Chapter Revisions

Revise Chapter 4, Adjustment Procedures, as shown. Changes are identified by bold red italics and 

strike-through text.

C4.10.1.2. Billing offices will process financial adjustments or claims citing the applicable 

Type of Bill Code (QD, WP, WU, or TD) based on the discrepancy report when the discrepancy 

report is validated and all of the following MILSBILLS or GSA criteria are met:

C4.10.1.2.1. Discrepancy Not Otherwise Resolved. The discrepancy was not 

resolved otherwise; for example, the vendor does not replace deficient materiel for a validated 

PQDR.

C4.10.1.2.2. Materiel Billed and Paid. The materiel was billed and paid previously 

or, in the case of reporting on a constructed document number, there is a reasonable basis for 

assuming that the items were previously billed and paid.

C4.10.1.2.3. Materiel Returned. The materiel is received by the depot storage 

activity in those cases where the discrepancy report reply requires the return. At the discretion of 

the SoS, adjustments may be processed prior to materiel return and then subsequently rebilled 

under the original document number due to failure to return materiel as directed.
Enclosure 8, ADC 1160

Page 1

Enclosure 8, Process Flow
Enclosure 9, ADC 1160

Page 1

Enclosure 9, DLA Distribution Publication